Appetite Grows for Beyond Meat Calls After Analyst Nod

J.P. Morgan Securities offered three reasons to like BYND shares here

Aug 20, 2019 at 10:54 AM
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Shares of plant-based burger maker Beyond Meat Inc (NASDAQ:BYND) are higher this morning, thanks to some upbeat analyst attention from J.P. Morgan Securities. The brokerage firm upgraded BYND stock to "overweight" from "neutral," and lifted its price target by $1 to $189. What's more, BYND call options are on fire today.

Specifically, J.P. Morgan Securities thinks Beyond Meat "stock is appealing once again," following a 40% drop from its July 26 high. The brokerage firm also outlined three reasons for renewed optimism: the vegetarian concern's potential to attract new food-service clientele, valuation, and "continued strength in measured data."

BYND stock was last seen 8.6% higher at $156.91. Following the aforementioned July peak, the shares took a hit after the company announced a secondary stock offering at $160 per share -- a major discount to BYND's price at the time. Nevertheless, the equity found a foothold in the $140 area, which represents a 50% Fibonacci retracement of the stock's all-time low and record high.

BYND stock chart aug 20

In light of today's bounce, option bulls are coming out of the woodwork. BYND has seen roughly 50,000 calls change hands in the first 90 minutes of trading -- about twice the average morning pace, and more than double the number of BYND puts exchanged.

Most popular by a mile is the weekly 8/23 160-strike call, followed by the weekly 8/23 165-strike call. It looks like traders are buying the calls to open, expecting Beyond Meat shares to topple the $160 and $165 levels, respectively, by the close on Friday, when the options expire.

Meanwhile, BYND options have rarely been cheaper, on a 30-day at-the-money (ATM) implied volatility (IV) basis. The current ATM IV reading of 58.3% compares to realized volatility of 94.6% over the past 30 days. In other words, BYND option buyers could enjoy some big-time leverage.

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